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Lenders sustain nearly $700K in losses from Alabama fraud scheme

Tuesday, Jun. 04, 2019, 11:01 AM

By SubPrime Auto Finance News Staff

MONTGOMERY, Ala. -

As the National Automotive Finance Association gears up for the “Fraud Friday” portion of its annual conference this week, federal prosecutors recently sentenced an Alabama man posing as an independent dealer to 63 months of imprisonment for bank fraud, mail fraud and drug charges as part of a scheme that cost auto finance companies nearly $700,000.

U.S. Attorney Louis Franklin Sr., Postal Inspector in Charge Adrian Gonzalez of the Houston Division and Assistant Special Agent in Charge Clay Morris with the Drug Enforcement Administration handed the punishment to Gene Earl Easterling of Montgomery, Ala. Easterling’s five year and three month prison term will be followed by three years of supervised release, according to a news release from the Department of Justice.

Officials said there is no parole in the federal system, and the judge also ordered Easterling to pay restitution to his financial institution victims.

Prosecutors explained the mail and bank fraud charges stemmed from a scheme in which Easterling and his associates submitted a series of fraudulent auto finance applications and received payment. Specifically, evidence showed that from March 2015 through October 2017, Easterling represented to several Montgomery banks and credit unions that he owned an independent dealership in the Alabama capital named Next-in-Line.

DOJ asserted Easterling and other individuals working with him would submit applications for auto financing to pay for vehicles from his lot. However, investigators determined Easterling never owned a dealership nor actually sold vehicles.

Investigators confirmed that Next-In-Line was never issued a car dealer’s license. And in fact, according to Next-In-Line’s business license, it was a computer/gaming repair company.

Once the financing approved and checks were sent to the applicant through the United States mail, officials said Easterling and his co-conspirators would take them to a bank to cash. They indicated Easterling would keep a portion of the check and give a portion to his accomplices.

DOJ went on to note that ultimately, no vehicles were ever purchased. Furthermore, once the checks were received, Easterling and his co-conspirators would make one or two payments on the contract then stop paying and attempt to discharge their debt through the bankruptcy courts.

In total, officials tallied 16 fraudulent auto financing checks were approved and resulted in a loss of $682,980 to the financial institutions. Prosecutors noted Easterling and his co-conspirators also submitted other applications that were not approved in the amount of $253,500.

According to the news release, Easterling’s co-conspirators also have pending cases.

As to his drug offense, officials said Easterling was also found to be in possession of cocaine with intent to distribute.

“When criminals lie to banks for their own personal gain, it hurts everyone. When they are also selling drugs, it is even more alarming,” Franklin said. “Unfortunately, there is no shortage of crooks out there trying to defraud individuals, financial institutions and government agencies. My office will continue to work with our law enforcement partners to protect the community from this type of criminal activity.”

Gonzalez said, “Gene Easterling’s conspiracy was motivated by pure greed. Using false business practices, Easterling shamelessly enriched himself by taking advantage of the goodwill of credit unions and banks. Because he also violated the sanctity of the U.S. Mail to further his crimes, Postal Inspectors diligently worked with our law enforcement partners to hold Easterling accountable for his actions.”

Morris added, “This investigation is a clear example of the connections between drug trafficking and other crimes.”

This extreme example is why the NAF Association organized “Fraud Friday” as part of its 23rd annual Non-Prime Auto Financing Conference. “Fraud Friday” includes an array of experts such as Frank McKenna of PointPredictive and Josh Wortman of General Forensics.

This conference begins on Wednesday in Plano, Texas. More details can be found at www.nafassociation.com.